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1 The FY 2016 President’s Budget is a Strategy-Driven, Resource-Informed Budget * Reflects FY 2013 Enacted level excluding Sequestration 614* Numbers may not add due to rounding $750 $250 $500 $0 FY01FY02 FY03FY04 FY05 FY06 FY08 FY07 FY09FY10 FY12FY11 FY13 FY14 FY15FY16FY17 FY18 FY19 FY DoD Topline, FY 2001 – FY 2020 (Current Dollars in Billions) The $27 billion shown in FY 2017 through FY 2020 for OCO are placeholder amounts Base Budget OCO Other

2 ($B) PB 2012 PB 2016 PB 2013 PB 2015 DoD Base-Budget Topline Comparisons PB 2014 SCMR Sequester-Level Budgets Original BCA Caps

3 The FY 2016 PB Request is Guided by the 2014 QDR Strategy The FY 2016 PB Request is shaped by the three pillars of the 2014 QDR strategy… –Protect the homeland –Build security globally –Project power and win decisively …and reflects the five key Priorities: –Rebalance to the Asia-Pacific –Maintain a strong commitment to security and stability in Europe and the Middle East –Sustain a global approach to countering violent extremists –Prioritize and protect key investments in technology –Reinvigorate efforts to build innovative partnerships 2014 QDR Strategy bends, but does not break, at PB 2016 levels Obtaining PB 2016 funding levels is essential to executing the defense strategy

4 PB 2016 Resource Levels Still Require Difficult Tradeoffs The U.S. Military remains deeply engaged around the world –Currently responding to three emergent geopolitical challenges: Russian activities in the Ukraine; rise of ISIL; Ebola The Department must address both current and emerging challenges –Cyber attacks –Rising China –Threats to space assets Achieving the right balance among capacity, capability, and readiness is increasingly difficult –The Joint Force faces severe deployment demands without full reset from war –U.S. technological edge is eroding –Recovering full spectrum readiness remains a challenge –Congressional opposition to Departmental reforms complicates our efforts –Uncertainty over future resource levels overhangs all program decisions Can support 2014 QDR strategy, unless sequester-level cuts return in FY 2016 or our proposed efficiencies and reforms are not accepted

5 PB 2016 Force Structure Closely Mirrors PB 2015 Decisions Force structure assessed sufficient to execute the strategy Major elements include: –14 SSBNs, 450 ICBMs –96 Operational Bombers (154 total) –304 Ship Navy with 11 Carriers –49 Tactical fighter squadrons –980k Army Total End Strength (by FY 2018) –221k Marine Corps Total End Strength (by FY 2017)

6 PB 2016 Resubmits Key Reform Proposals in the PB 2015 Budget Army aviation restructure Navy Cruiser/LSD phased modernization program Air Force A-10 divestiture Base Realignment and Closure Compensation Reforms

7 PB 2016 Significant Modernization Programs 57 Joint Strike Fighters ($10.6 billion) 16 P-8 aircraft ($3.4 billion) 5 E-2D aircraft ($1.3 billion) KC-46 tanker ($3.0 billion) and Long Range Strike development ($1.2 billion) 9 ships ($11.6 billion) George Washington (CVN) overhaul ($678 million) Ohio replacement strategic submarine development ($1.4 billion) Littoral Combat Ship capabilities improvements ($55 million) Cyber capabilities enhancements ($5.5 billion) Ground Based Interceptor reliability ($1.6 billion) Army helicopter modernization (e.g., Light Utility Helicopter) ($4.5 billion) Reaper (MQ-9) procurement ($821 million)

8 PB 2016 Makes Additional Investments in Key Capabilities Funds nuclear enterprise improvements –Improve nuclear weapons facilities –Enhance ICBM operations with improved manning and safety procedures –Accelerate technology improvements Invests in space capabilities –Space control development –Space launch initiatives Develop alternative domestic launch capability Includes additional investment in advanced sensors, communications, and munitions for power projection Funds science and technology to manage technological risk

9 PB 2016 Reflects an Increased Emphasis on Innovation Defense Innovation Initiative –Developing 21 st century leaders –Implementing a new Long-range Research and Development Planning Program (LRRDPP) –Reinvigorating Departmental wargaming –Developing new operational concepts –Implementing 21 st century business practices Examples of technological emphasis areas –Assured positioning, navigation and timing –High speed strike weapons –Aerospace Innovation Initiative –Railgun –High energy laser

10 PB 2016 Continues to Pursue Compensation Reform FY 2016 Budget request savings (FY16, $1.7B; FYDP $18.2B) –FY16 Basic Pay raise 1.3% (FY 2016, $0.7B; FYDP, $4.3B) –Slow growth in Basic Allowance for Housing – an additional 4% out-of-pocket above 1% authorized by Congress in FY 2015 (FY 2016, $0.4B; FYDP, $3.9B) –Reduce Commissary Operating costs and subsidy through efficiencies and revenue generating opportunities gained through legislative changes (FY2016, $0.3B; FYDP, $4.4B) –Consolidate TRICARE healthcare plans with altered deductibles/co-pays to encourage beneficiaries to seek care in the most appropriate setting and improve the overall continuity of care. (FY 2016, -$0.1B; FYDP, $3.1B) –Implement modest annual fees for TRICARE-For-Life coverage for retirees 65 and over (FY 2016, $0.1B; FYDP, $0.4B) –Additional changes to pharmacy co-pay structure for retirees and active duty family members above the FY 2015 authorized level to further incentivize the use of mail order and generic drugs (FY 2016, $0.3B; FYDP, $2.0B)

11 PB 2016 Continues to Support Broad Institutional Reform Seeks BRAC authority to reduce excess base infrastructure Supports a full review of Business and Management Systems Sustains financial auditability improvements Sustains Better Buying Power 3.0 Supports an improved healthcare system Sustains sexual assault prevention and response programs Supports reorganization of missing personnel programs and offices

12 Overseas Contingency Operations Included with this Budget Request –$50.9 billion –Continues decline since FY 2010 –Reflects continued operational demands on U.S. forces Continues responsible transition in Afghanistan –Includes training and equipping of Afghan security forces ($3.8 billion) Funds Counter-ISIL Operations ($5.3 billion) –Includes training and equipping of Iraqi forces and vetted moderate Syrian opposition ($1.3 billion) Includes Counterterrorism Partnerships Fund ($2.1 billion) Continues European Reassurance Initiative ($789 million) Funds International support ($1.7 billion) –Coalition Support Fund Resets/retrogrades equipment ($7.8 billion) If sequestration lifted, plan to transition enduring costs currently funded in the OCO budget to the base budget beginning in 2017 and ending by 2020

13 Summary Resource informed, strategy-driven budget –Addresses current and future operational challenges –Retains major elements of PB 2015 force structure –Sustains return to full spectrum readiness after sequestration and 13 years of war –Invests in the future Nuclear enterprise Space Power projection Cyber Innovative platforms and capabilities –Maintains our commitment to our people and families Need support from Congress –Support key investments in modernization –Support force structure adjustments –Support compensation reforms –Support BRAC 2017 –Remove threat of sequestration Can Support 2014 QDR Strategy with Manageable Risk – with Elevated Risk in Selected Areas